Capital Gains: How are compensation payments for the loss or destruction of an uninsured asset treated?

1. The entire loss or destruction of an asset, or loss or destruction of part of an asset, constitutes a disposal of that asset, or part of that asset (section 160N).

2. Where an uninsured asset, or part of an uninsured asset is lost or destroyed, any payment received as compensation by a taxpayer, is taken to be an amount of money received "as a result of or in respect of" the disposal of that asset or part of that asset (section 160ZD). If an uninsured asset was acquired before 20 September 1985, no part of the compensation payment received in relation to that asset would be subject to CGT.

Note:

This Determination should be read in conjunction with CGT Determination No.31 which deals with the treatment of proceeds from insurance policies.

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.